(Maurie Backman)
Whether you’re a real estate investor looking to free up cash by selling an income property or an ordinary homeowner, the timing of a home sale is important. This is because it could dictate how much money you will walk away with.
If you’re thinking about selling a home, you may be wondering if you should go ahead now or wait another year. But based on what we know about the housing market, as well as the economy in general, it’s pretty clear that selling now is your best bet. Here’s why.
Image source: Getty Images.
1. Low inventory could be to your advantage
The US housing market still does not have enough inventory to meet buyer demand. The National Association of Realtors reports that at the end of October there were 1.22 million homes available for sale. That’s a mere 3.3 month supply. For context, it often takes a six-month supply of homes to meet buyer demand.
People also read…
Also, home inventory has been falling for three straight months, and we don’t know when that trend will reverse. That’s just one of the reasons it pays to list your home now.
If you’re selling at a time when there isn’t much competition, you might be able to get a higher asking price because buyers won’t have many other options to look for. If you wait a year, housing stock could increase significantly by then. It could mean more competition and less bargaining power.
2. Rising mortgage rates could keep buyers away
Today, the average 30-year mortgage hovers around 7%. Sure, we might see occasional dips in the 6.5% range, but all things considered, borrowing rates are high.
However, this does not mean that mortgage rates have stopped rising. The Federal Reserve recently doubled down on its plans to keep raising interest rates to fight inflation, which could indirectly drive up mortgage costs. And if borrowing for a home becomes more expensive, a large number of buyers could pull out of the market, due to affordability concerns. This is a situation you will want to anticipate.
3. A recession could force buyers to put their plans on hold
For months, pundits have been sounding recession warnings as inflation and other factors converge to paint an unfavorable economic picture. If a recession hits in 2023, it could lead to widespread unemployment. And that could force more buyers out of the market, narrowing the gap between supply and demand.
Additionally, potential buyers who are gainfully employed during a recession might still choose to put a house purchase on hold to play it safe. So you don’t want to wait for economic conditions to deteriorate to sell your home, which is why you need to act now.
Do not be too long
Selling a house is a big business. But waiting a year could put you in a much worse position. If your goal is to maximize your profits, it pays to put your home up for sale as soon as possible.
10 stocks we like better than Walmart
When our award-winning team of analysts have investment advice, it can pay to listen. After all, the newsletter they’ve been putting out for over a decade, Motley Fool Equity Advisortripled the market.*
They have just revealed what they believe to be the ten best stocks for investors to buy now…and Walmart wasn’t one of them! That’s right – they think these 10 stocks are even better buys.
Portfolio Advisor Returns as of October 26, 2022
The Motley Fool has a disclosure policy.
Comments are closed.